LGP reaches first close on second UK Property Income Fund, with GAV of Â£224m.
22 November 2013
Legal & General Property (“LGP”) announces the successful first close of its second UK Property Income Fund (“UK PIF II” / the “Fund”). Representing the largest first close achieved yet this year for a UK focused fund, the Fund has secured over £138m (c.€165m) from seven investors, giving it a total investment capacity or Gross Asset Value (GAV) of £224m (c.€267m) when including gearing.
Drawing on the track record of its maiden UK Property Income Fund (UK PIF I), subscriptions for UK PIF II came from institutions based in the UK, Nordics and Middle East, four of which invested in the first fund. With a strong pipeline of investor interest and a second close expected before the end of 2013, the Fund is targeting a GAV of £750m, through a series of closings, and is capped at a GAV of £1bn.
A closed-ended English Limited Partnership, the Fund will feature off-shore feeder vehicles. Providing a unique solution to wide ranging leverage appetites across an international audience of investors, it will retain the proven fund structure of UK PIF I, which allows investors to choose their preferred level of gearing of between 0% and 50% Loan to Value (LTV). The Fund will target opportunities that are expected to allow it to achieve a net IRR of 8-9% for ungeared investors and a net IRR of 12-14% for geared investors. As with UK PIF I, the Fund will deliver a core/core-plus risk strategy over a seven year lifespan.
Aiming to provide investors with robust income based returns from assets in strong geographical locations that are underpinned by the right fundamentals, the Fund seeks to capitalise on the opportunities presented by changing market conditions, constructing a portfolio that will be well positioned to benefit from long-term economic recovery in the UK. Taking a flexible investment approach, the Fund will target larger lot size assets, across all sectors.
Supported by a circa 90 person strong dedicated UK real estate team, UK PIF II is led by the same management team responsible for the impressive track record of UK PIF I and will use the superior depth of expertise across LGP’s platform to enhance returns. Focussing on assets that require specialist property management skills to reach their full potential, rather than being reliant on market movement to drive returns, it will identify and execute asset management business plans in order to take advantage of the yield gap that it believes exists.
Furthermore, based on LGP’s firm belief that sustainability is now arguably one of the most critical agents of change in real estate ownership, identifying potential risks and solutions, sustainability considerations will be fully integrated into the Fund’s investment strategy, helping to inform all of its decisions from acquisition through to asset management initiatives.
Charlie Walker, Director of Business Development and Fund Manager of the UK PIF I and UK PIF II, comments: “Representing the largest first close achieved yet this year for a UK focused fund, the high level of investor interest and commitment secured to date is a significant endorsement of the compelling strategy implemented in UKPIF I, leveraging its proven track record of success.
“As a weight of overseas capital continues to drive up the prices of lower risk, prime assets, particularly those located in London, there continues to be a favourable illiquidity discount on larger lot sized properties outside prime. The strategy is positioned in a relatively uncongested space and, benefiting from a strong potential asset pipeline, I look forward to commencing our acquisition programme and continuing to build investor commitments during 2014.”
Reaching final close at the end of 2011, UKPIF I secured a total of £300 million of equity from 14 major international institutional investors based in the Middle East, Denmark, UK, France, Finland, Switzerland and Japan. With assets under management currently totalling £430 million, following the acquisition of the FIX Portfolio for £115.9 million at the start of this year, UKPIF I is fully invested. Other properties within the portfolio include 1 City Place in Gatwick, The Meadows Shopping Centre in Chelmsford, Fremlin Walk Shopping Centre in Maidstone, Guildford Business Park and the Co-op distribution centre in Andover.
Cushman & Wakefield Corporate Finance Ltd is appointed as placement agent for this fund.
Notes to editors
Legal & General Property
Legal & General Property (LGP) is a wholly-owned subsidiary of Legal & General Investment Management (LGIM), one of Europe’s largest institutional asset managers and a major global investor. LGIM manages approximately £443bn in assets on behalf of more than 3,100 clients (30 September 2013) and provides products and solutions spanning all asset classes. LGP is the third largest institutional property fund manager in the UK, managing or co-managing 16 separate funds or vehicles and two segregated mandates with an aggregate asset value of £11.6bn as at 30 September 2013. These funds include:
Specialist Pooled Funds
The Leisure Fund Limited Partnership; Industrial Property Investment Fund; Arlington Business Parks Partnership; and the English Cities Fund
Single Asset Vehicles
Bracknell Regeneration Partnership; Central Saint Giles Partnership; Performance Retail Limited Partnership and Warrington Retail Limited Partnership
Life Fund; Linked Pensions; Linked Life; Managed Fund; Property Unit Trust; UK Property Income Fund; LPI Income Property Fund and the Hybrid Property Fund.
LGP’s UK-focused fund management platform has built and retained a strong track record of out-performance across the sector. Owing to its size, diversity and penetration, it benefits from best in class banking and property industry contacts which, along with its wealth of in-house skill and expertise, have enabled it to continue to attract and secure high quality market opportunities. Taking a client-centric approach, the business places the highest priority upon integrity and transparency, leveraging upon the significant resources provided by the wider LGIM platform. Sector specialists cover each sphere of the market and are supported by LGP’s market-leading research capability. LGP’s sector specialisms cross all facets of the real estate market. In particular, the Company has a major development platform, responsible for delivering West End landmark building, Central Saint Giles, and Agar Street, its high profile Covent Garden office scheme, amongst others, and is currently involved in bringing forward a number of significant town-centre retail and leisure regeneration projects, including Bracknell, Trowbridge, Northampton and Eastbourne.
Legal & General Property Limited. Registered address: One Coleman Street, London EC2R 5AA. Registered in England 2091897.
For more information please contact:
PR Manager, Legal & General Capital and Real Assets, LGIM (Property, infrastructure and alternative finance)
t: + 44 (0) 203 124 2777
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